Aluminium in demand as US stages recovery

What's Up: Aluminium prices have soared as the United States shows stronger signs of growth, with the Emirates' two biggest smelters seeing higher sales.

Emirates Aluminium is expecting strong growth from the US to drive sales in the year ahead as the world's largest economy shows strong signs of recovery. Jaime Puebla / The National

The UAE's aluminium producers are reporting soaring demand as the United States returns to stronger growth.

The price of the metal, which fell for much of last year, has risen 11.1 per cent since the start of the year to US$2,245 per tonne.

Emirates Aluminium is expecting strong growth from the US to drive sales in the year ahead as the world's largest economy shows strong signs of recovery.

The aluminium smelter, known as Emal and based in Abu Dhabi, expects sales to the US to more than double from 100,000 tonnes last year to 250,000 tonnes this year, said Saeed Fadhel Al Mazrooei, the company's president and chief executive.

"The orders on our metals have increased because one of our prime products is for automotives," he said, adding that the company hoped to capitalise on surging demand for trucks.

The demand was leading the smelter to boost its production capacity, Mr Al Mazrooei added.

"I have my order book of 900,000 … tonnes. I can only produce 750,000 tonnes," he said.

Emal is a joint venture between Dubai Aluminium (Dubal) and Mubadala Development, a strategic investment company owned by the Abu Dhabi Government.

Dubal reported full-year net profit of Dh3.52 billion, an increase of 65.2 per cent on the previous year.

"The results reflect a combination of higher production and sales volumes, plus the benefit of higher aluminium prices, coupled with sustained focus on controlling the cash conversion cost," the company said in a statement carried by Bloomberg News.

Sales grew by 29 per cent to Dh11.14bn, the statement said.

Elsewhere in the region, Aluminium Bahrain has lagged, with the company's shares falling 10.1 per cent since the start of the year to 0.575 Bahraini dinars as a bribery scandal swirled.

But with a price-to-earnings ratio of 3.8, the stock looks extremely cheap - especially with a yield approaching 7 per cent.

But the growth in orders for UAE aluminium comes alongside indications of decelerating growth in China, the world's biggest car market and a major importer of industrial commodities. Whether strong US demand can compensate remains to be seen.

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